“Drugmakers donate hundreds of millions of dollars to charities that help U.S. patients cover out-of-pocket costs for drugs. In turn, the drugmakers rely on the charities to effectively boost the sales of those drugs. The assistance (from the charity) ensures patients fill their prescriptions, and insurance picks up the rest of the tab.

Every $1 million donated to charities can lead to up to $21 million in sales for drug companies, according to CitiResearch.”

A note from J.P. Farley regarding the above mentioned article:

Understand very clearly that this is another of many examples of how those on the receiving end of ever expanding health care expenditures, including primarily hospitals, drug companies, device manufacturers, and insurers, are looking at employer health care plans as an ever expanding source of revenue and profits. They continue to go to extraordinary lengths to achieve their financial goals. If that means co-opting the good intentions of those sincerely attempting to assist patients or plans, so be it. From their standpoint, that is passes as very rational behavior.

This should serve as a wake up call for plan sponsors to implement more cost management strategies on your own. This investigation demonstrates how irrational it is to think that anyone on the receiving end of ever expanding health plan expenditures is really serious about reducing costs. The more you can do on your own, or in partnership with an independent TPA, the better off your plan will be.

The full article appeared in the Monday, June 12th edition of the Wall Street Journal.